The amount of debt you have has an impact on your credit score. A bad credit score will have negative implications in your financial life. You will not be able to make large purchases, rake up a mortgage, buy a car and do make many other financial decisions in your life.
Here are the most common consequences of having bad credit.
Follow-ups by debt collectors
Having bad credit could mean that you might have defaulted on many loans. As a result, debt collectors might be on your back trying to recover their money. Worse still you can even lose your assets if you had signed them as collaterals to your lenders.
Security deposits for your utilities
You will have to pay utility bills such as electricity and phone. To get approved for these services, they will check your credit background to establish your creditworthiness. If you have a bad credit score, the utility companies will require you to pay security deposits to act as collateral in case you default on your bills.
Trouble renting out an apartment
When you are looking for an apartment, the manager or landlord will likely want to run your credit score. It will enable him to decide if they should accept you or not as a tenant. If you have a low credit score, the landlord can deny you the opportunity. They will fear that you can default in rent payments leading to losses on their part
Denials on loan applications and approvals
Most lenders are not willing to take risks with their money. Bad credit means that you have a high risk of defaulting on your loan defaulting. As a result, every application will be denied and so does the approval.
High-interest rates on loans
Credit score has effects on your loan accessibility. A good credit score will make you get approved for a loan while the negative credit score will limit you when you are applying for the loan. When you have bad credit, you will get high-interest rates on your loans making you pay even more interest when you borrow a higher loan amount
Problems getting employment and job clearance
Government agencies and financial institution are most likely to conduct security and credit clearance on their employees. When you apply for these jobs, a credit score is one of those checks. A bad credit score can make you get denied the job even though you were qualified.
Strain in your finances as a couple
As a couple, your low credit score should not affect your partner. However, you are likely to buy some things jointly. These can be getting a loan to buy a house or car. In such cases, your lender will consider the credit background for both of you. You can face disapproval and even high-interest rates on loans. These situations can threaten the existence of your relationship as a couple.
It is essential to keep track of your credit score by using tracking tools as well as using credit scores and score websites. If you already have low credit, you can pay your debts in time and eventually improve your credit. If you have a high credit score, you should maintain the records because a bad credit will bring you more bad than good.